Joint exploration project strikes pay dirt

Posted: Thursday, January 24, 2002

Working together can be a gas. Marathon Oil Co. and Unocal Corp. found this out Tuesday afternoon when a joint exploration in Ninilchik struck pay dirt, producing a significant natural gas discovery.

The Grassim Oskolkoff No. 1 well, the first exploration well drilled under a joint operating agreement between Unocal and Marathon, has been estimated to have the ability to produce 90 billion cubic feet (bcf) of gross proven recoverable gas reserves.

A 39-foot interval in the sand produced restricted flow rates of up to 11.2 million cubic feet per day. The zone tested was at 9,822 feet, and the well was drilled to a total depth of 11,600 feet.

"We've had huge success on this first exploratory well," said Unocal Alaska spokesperson Roxanne Sinz. "Ultimately, what we're doing is looking at building a pipeline. With this significant discovery, it has moved to the next step."

That next step, plans for a natural gas pipeline running from Homer to as far north as the Matanuska-Susitna area, is well under way. The two companies will again combine forces and join with Enstar to build and operate the Kenai Kachemak Pipeline. Marathon and Unocal will split ownership of the pipeline project, which is scheduled to begin construction this fall and begin transporting gas by late 2003.

In the meantime, the two companies have already begun searching for more wells across the Kenai Peninsula. Unocal Alaska Vice President Chuck Pierson said that Unocal has begun a separate three-well exploration program on the southern peninsula.

"These wells have major implications for natural gas development on the southern Kenai Peninsula," Pierce said. "Based on the results of the Marathon- and Unocal-operated programs, we expect to have sufficient gas resources to support construction of the proposed Kenai Kachemak pipeline."

A report commissioned by the Anchorage Economic Develop-ment Corp. last year found that Southcentral Alaska will face natural gas shortages by the middle of the decade unless new reserves are discovered.

Some gas producers stepped up exploration last year, citing a couple of potential reservoirs that could help heat and power cities across the region for decades.

Unocal produces oil and gas in Cook Inlet and on the Kenai. It said the Ninilchik unit and other prospects on the southern peninsula could contain reserves of between 100 billion and 600 billion cubic feet of gas.

Unocal's three wells will begin testing over a three-month period beginning this month. The first, Ninilchik Native Association No. 1 well near Deep Creek, will be complete by month's end. The second well, Pearl No. 1, will begin operation sometime in February in southern Ninilchik. Griner No. 1 well, located in Anchor Point, will begin drilling around mid-March.

Marathon already has three wells completed on the peninsula that are ready to go into operation. John Barnes, manager of Marathon's Alaska business unit, said one of those ventures is a second well, Grassim Oskolkoff No. 2, at the joint site in Ninilchik. He said two more southern peninsula sites -- the Susan Dionne well and the Falls Creek well -- that were drilled during the '60s, have been refurbished and were completed at the end of 2001.

"The Ninilchik discovery, together with our recent Wolf Lake production coming on-line (came on production Nov. 17, east of the Beaver Creek field in the Kenai Wildlife Refuge), demonstrates Marathon's continuing commitment to the Cook Inlet natural gas market," Barnes said. "More drilling is planned to identify whether gas is present and figure out what our overall volume is."

The Associated Press contributed to this story.

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